Moment of truth for EU gas pipeline

The EU-endorsed Nabucco pipeline project is shrinking and might vanish by the end of June.

When executives from five energy firms - Botas, Bulgargaz, Mol, OMV and Transgaz - ate dinner in Vienna in October 2002 after watching the Verdi opera Nabucco, they envisaged a 3,900-km-long pipeline that would bring 31 billion cubic metres (bcm) a year of Azerbaijani, Iraqi and Turkmen gas from the Georgian-Turkish border to Austria.

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In strategic terms, the project was designed to end Russia's monopoly on Caspian Sea gas imports and to weaken its political influence in central and eastern Europe.

Ten years later, it has shrunk and it has a new name: Nabucco West. The old concept is being called Nabucco Classic.

Nabucco West is to be a 1,300-km-long pipeline that will bring 10 bcm of Azerbaijani gas from the Bulgarian-Turkish border to Austria from 2017.

It is competing with two other options: the Tap pipeline to ship the gas from Turkey to Italy and the Seep pipeline to ship it from Turkey to Austria.

The companies which operate Azerbaijan's Shah Deniz gas field - which will supply the winning pipeline - are to decide by the end of June whether Nabucco West or Seep go through to a final round of competition against Tap.

The main shareholder in the Shah Deniz consortium, BP, is also the main firm behind Seep.

BP's chief of refining and marketing, Iain Conn, in a speech in Berlin on Thursday (24 May) said the selection will be made on "transparent criteria" and that "there is no pre-determined winner, the competition is fully open."

He added that Seep "offers an efficient routing into and through these strategically important markets" in south-east Europe. He did not say anything nice about Nabucco.

A BP spokesman, Toby Odone, told EUobserver on Friday that in any case Nabucco Classic is dead.

"To all intents and purposes it isn't going to happen. It's just not in the frame ... When Nabucco was first planned it talked about multiple sources [Turkmenistan, Iran] coming together. That just hasn't happened. All those agreements haven't come through," he said.

The Nabucco consortium and the European Commission say it is still alive.

"We are confident that Nabucco West will win the bid, and then I still think, that the original Nabucco concept will be discussed again," Leonhard Birnbaum, a board member of one of the Nabucco consortium companies, Germany's RWE, said on Thursday.

Commission spokeswoman Marlene Holzner told press on Friday: "To our understanding, the Nabucco Classic version is still on the table."

She noted that in strategic terms it does not matter whether Tap, Seep or Nabucco win, so long as the EU gets direct access to Caspian gas and the 10 bcm capacity can be increased in future.

In technical terms, if the wall of a gas pipeline is thick enough then more gas can be pumped through it under a higher pressure. If all the inter-governmental agreements are in place to lay one pipe, then it is easy to lay a second one along the same route.

"For the EU, it does not matter what the name of the pipeline is, but that the 'content is Nabucco'," Holzner said.

The EU's Nabucco gas pipeline received a boost on Monday as the European Investment Bank, the European Bank for Reconstruction and Development and the World Bank made a first written commitment that may lend the project up to €4 billion, half of its total cost.

Moscow expressed its "disappointment" on Tuesday over EU plans to build a Trans-Caspian pipeline connecting large Turkmen gas reserves to Azerbaijan, offering an alternative to the Russian monopoly on gas transports from that region.